Panama Covid-19 update – today saw another 119 new cases and 3 new fatalities reported. The 2,605 active cases include 42 in ICU and 174 in other wards.
However, the headline in my day was spotting a pair of crocodiles as we walked back from a trip to the Canal’s visitors’ centre…
10 OCTOBER 2021
DEATH OF CONTROVERSIAL PAKISTAN NUCLEAR SCIENTIST AQ KHAN
On 10 October, various media reported the death at 85 of AQ Khan. Abdul Qadeer Khan was a Pakistani nuclear scientist who acknowledged being part of a nuclear proliferation ring that gave Pakistan its nuclear weapons, and who was at the centre of a global nuclear proliferation scandal in 2004 that involved sales of nuclear secrets to North Korea, Iran and Libya.
On 10 October, Pindula reported that the National Security Taskforce has over the past 30 days intercepted 68 buses suspected to be transporting smuggled goods from South Africa. It quoted the example of one bus that was intercepted loaded with various goods we believe had been smuggled. It said it had been half-full with the goods, mainly bales of new clothes, and its trailer was also loaded to capacity.
CHINESE CUSTOMS PROBE 923 CASES OF SMUGGLING ENDANGERED WILDLIFE IN NEARLY 3 YEARS
On 10 October, Macau Business reported that Chinese customs probed 923 criminal cases of smuggling endangered wildlife from January 2019 to September 2021. This is said to have involved 1,552.7 tonnes of endangered wildlife and its products.
AUSTRALIA: GAMBLING WATCHDOG UNAWARE OF CRIMINAL INFILTRATION OF STAR CASINOS
On 10 October, the Brisbane Times reported that the New South Wales gaming regulator was kept in the dark about confidential reports commissioned by gaming giant Star Entertainment which found it was failing to properly combat the risk of organised criminals or terrorists exploiting the company’s Sydney and Queensland casinos. This was despite the regulator having helped expose near identical behaviour involving Crown Resorts via the Bergin inquiry last year. It is said that Star is facing an investigation by Austrac into Australia’s casinos and which was launched after TV and newspapers exposed criminal infiltration of Australian casinos in August 2019.
UK: MIKE LYNCH EXTRADITION DECISION OVER $5 BILLION FRAUD TRIAL DELAYED
On 10 October, City AM reported that adecision to extradite British entrepreneur Mike Lynch has been pushed to the end of the year. Lynch, a billionaire, faces accusations he flattered his own company, Autonomy, accounts to extract a better price when it was sold to Hewlett-Packard in 2011.
CYPRUS: 7 YEARS SINCE FBME BANK CLOSED STRICKEN DEPOSITORS STILL IN LIMBO
On 10 October, the Cyprus Mail said that it was 7 years since the Central Bank (CBC) closed the Cyprus branch of a Tanzanian lender named a financial institution of primary money laundering concern by the US. It says that Cyprus and Tanzania need to agree to cooperate, thus unfreezing some €1.3 billion held by foreign banks abroad. It says that a group of UK-based depositors have urged the CBC to take control of the funds in FBME and return them to their rightful owners. FBME was based in Tanzania but according to FinCEN, it transacted 90% of its global banking business through branches in Cyprus. Attempts to liquidate the bank in Cyprus saw the Supreme Court upheld a lower court decision in 2018, saying FBME Bank Ltd could not be subject to liquidation proceedings because it was a foreign bank with a branch in Cyprus and not a Cypriot bank, and the matter is still bogged down in lengthy legal processes.
SOUTH KOREA: CORRUPTION OFFICE INVESTIGATION INTO FORMER PROSECUTOR GENERAL, A FRONT-RUNNING PRESIDENTIAL CANDIDATE, AND NATIONAL INTELLIGENCE SERVICE DIRECTOR
On 10 October, an editorial from Korea JoongAngn Daily said that the Corruption Investigation Office for High-ranking Officials (CIO) has gained impetus in its investigation into criminal charges against former Prosecutor General Yoon Seok-youl, a front-running presidential candidate of the opposition People Power Party (PPP), over power abuse when he was top prosecutor. It has also embarked on an investigation of Park Jie-won, National Intelligence Service director, on suspicion of orchestrating the exposure on former Prosecutor General Yoon.
On 8 October, Sahara Reporters reported that the Economic and Financial Crimes Commission (EFCC) had rearrested Nigerian businessman, Alhaji Aliyu Abubakar, Chairman of AA Oil. The trial of Abubakar and former Attorney-General of the Federation, Mohammed Adoke for corruption and money laundering in the Malabu oil deal continues. The long-running case centred around the $1.3 billion purchase of an offshore oil block in 2011, and prosecutors had alleged that the majority of the money was paid as Bribes to Nigerian politicians and officials. However, a court in Milan said the 2 companies, and 13 defendants, including past and current executives, had no case to answer.
On 7 October, Global Finance published a report about the launch of the world’s first officially issued and central bank-backed digital currency (CBDC) – the Sand Dollar. The programme launched in October 2020 but is only now starting to be implemented in earnest, with several commercial banking systems and payment providers connecting to mobile Sand Dollar wallets, and a renewed push to enrol individuals on the various platforms. It is said that because it is an extension of the country’s fiat currency, the Sand dollar carries the same guarantees as the regular Bahamian dollar, which is pegged at a one-to-one ratio to the US dollar.
WHO WAS BEHIND THE CHEMICALS THAT DESTROYED THE PORT OF BEIRUT IN 2020?
On 10 October, PortSEurope said that a chemical-trading network controlled by Ukrainians and hidden behind a veil of proxies and shell firms was the owner of the 2,700 tonnes of unsafely stored ammonium nitrate that exploded in the port of Beirut, according to an investigation by OCCRP.
On 10 October, The Standard reported that police believe they have smashed a syndicate that conned over 520 victims of HK$55 million by luring them into joining 2 loan schemes. 32 suspects, 29 men and 3 women aged 18 to 55, were arrested for money laundering and conspiracy to launder money.
IRAN’S POWER COMPANY WARNS OF CUTS DUE TO ILLEGAL CRYPTOCURRENCY MINING
On 10 October, Rferl reported that Iran’s state electricity company has warned that illicit cryptocurrency miners in the country could cause new power cuts this winter. Illegal cryptocurrency mining will account for at least “10 percent of electricity outages this winter”, the power company.
HOW US STATES HELP RICH FOREIGNERS SHIELD THEIR ASSETS
On 10 October, the Globe & Mail in Canada says that the Pandora Papers have detailed how world leaders and some of the planet’s wealthiest people hide their riches has drawn new scrutiny to the growth of tax havens in the US. Along with the familiar offshore havens, the report also disclosed secret accounts in trusts scattered throughout the US, including 81 in South Dakota, 37 in Florida and 35 in Delaware.
On 9 October, ICIJ reported that, after the election loss, billionaire Andrej Babis now faces probes over secret luxury property deals exposed in ICIJ’s global investigation based on the biggest ever offshore data leak. His party has narrowly lost the Czech Republic’s parliamentary election days after the populist leader had to contend with revelations from the Pandora Papers.
Panama Covid-19 update – with the country said to be on a “plateau”, today has seen 223 new cases and 4 new fatalities; with 2,688 active cases, 44 in ICU and 179 in other wards.
9 OCTOBER 2021
PANAMA: GUATEMALA SEIZES JET USED BY MARTINELLI BROTHERS
On 8 October, La Prensa reported that the Guatemalan authorities had ordered the seizure of the private jet on which the 2 sons of former Panamanian President Martinelli arrived in the country last year. Despite claiming diplomatic immunity, they were arrested and face extradition to the US. Ricardo Alberto and Luis Enrique Martinelli Linares face charges involving alleged money laundering.
NEW CONTROLS ON BIOTECH SOFTWARE MAY RESTRICT EXPORTS AND TRIGGER CFIUS FILINGS
An article from Fenwick & West LLP on 5 October said that the US Commerce Department’s Bureau of Industry and Security (BIS) had published a final rule amending the Export Administration Regulations (EAR) to include new controls on genetic editing software and related technology. This implements a decision of the multinational Australia Group in May to expand multilateral regulation of dual-use biological equipment ― specifically, nucleic acid assembler and synthesizer software capable of designing and building functional genetic elements from digital sequence data. The article looks at the changes and considers the implications, highlighting the possibilities (or probabilities) of export licensing requirements, controls that can apply to the hiring of foreign nationals to work on this technology, and CFIUS hurdles for investments or acquisitions by foreign persons.
MANUAL ON FINANCIAL INVESTIGATIONS TO GUIDE LAW ENFORCEMENT PROFESSIONALS IN UKRAINE
On 30 September, the Council of Europe launched this Manual. It is the product of more than 2 years of joint efforts by law enforcement agencies, the FIU, the asset recovery and management agency, and the customs and border guard services supported by international partners. It is a response to the findings of the MONEYVAL Fifth Round Evaluation Report, which indicated that there was some confusion between law enforcement agencies on a clear and common definition of financial investigation – in particular on whether it covered investigation into money laundering, investigation into other financial offences, or investigation of proceeds derived from offences. In addition, it had been found that there were no common instructions on when to start a financial investigation and what its aim should be. As a result, in-depth financial investigations had appeared to be rare.
LATVIAN POLICE SEIZED ASSETS WORTH MORE THAN A BILLION EUROS THIS YEAR
On 8 October, the Baltic News Network reported that Latvian State Police have seized assets worth €1.4 billion battling money laundering in some 300 cases; and approximately €47 million was transferred to the state budget.
CONTENTIOUS INSOLVENCY FOR THE ASSET RECOVERY COMMUNITY
The latest Thought Leaders 4 newsletter carries a new series of articles –
Issues in contentious insolvency cases – including wrongful trading and other potential claims against director; expansion of directors’ disqualification regime; the principle of “witness immunity” to examinees under section 236 of the Insolvency Act 1986;
Privy Council refuses to extend the reflective loss rule in claim arising out of the Madoff Ponzi scheme;
Provisional liquidation in the Cayman Islands;
Leveraging investigations in the context of contentious insolvency proceedings;
Obligation of Swiss banks to provide information in bankruptcy proceedings, including evidence against themselves;
Problems facing the disguised distribution claim;
A guide to compulsory winding-up in Guernsey;
The new Liechtenstein insolvency law;
Withdrawal of measures to protect businesses from insolvency during Covid-19 – lessons from Australia;
Cross border insolvency in the BVI;
Funding insolvency claims and the assignment model;
The imminent insolvency tidal wave;
Insolvency, crypto and electronic money; and
Use of provisional liquidators in fraud cases to preserve assets.
SUCCESSFUL CLAIMS FOR BREACH OF CONFIDENCE AND UNLAWFUL CONSPIRACY
An article from HFW reported that Norwegian naval architects, Salt Ship Design A/S, have succeeded with claims against the Italian cable laying company Prysmian Powerlink Srl. for breach of confidence and unlawful conspiracy following a trial in the High Court in London.
On 8 October, ICAEW published an article saying that the best way to minimise the damage of a cyber attack is to be prepared. It explains that a security breach is a break-in, while a data breach is when a cybercriminal gets away with information. During the COVID-19 pandemic, the global average cost of a data breach increased from $3.9 million to $4.2 million.
MOLDOVA: DEPUTY PROSECUTOR GENERAL RUSLAN POPOV INVESTIGATED ON ILLICIT ENRICHMENT CHARGES
On 9 October, the IPN News Agency reported that the Anticoruption Prosecution Office has started criminal proceedings on illicit corruption charges against Deputy Prosecutor General Ruslan Popov, currently suspended from office.
NEW YORK ART DEALER PLEADS GUILTY TO HAVING DEALT STOLEN ART
On 8 October, OCCRP reported that Nancy Wiener, the owner of a Manhattan art gallery who sold ancient artefacts to major auction houses like Christies and Sotheby’s, has pleaded guilty to a conspiracy to knowingly have dealt in stolen goods.
On 7 October, an article from Ogier says that a Cayman Islands foundation company has proven itself to be one of the most useful and flexible legal structures for projects involving decentralised autonomous organisations (DAO). Such projects include decentralised finance (DeFi) protocols and platforms. It also asks that, with the introduction of the Virtual Asset (Service Providers) Act, 2020, how exactly are DeFi projects now being structured in light of this new law? The article looks at some of the structuring options.
US: BIOLOGICAL WEAPONS POLICY ACT SEEKS CRACKDOWN ON BIOWEAPONS AND COUNTRIES OF CONCERN
On 5 October, Homeland Preparedness News reported that a new Bill seeks to quash further bioweapons development through greater scrutiny of US research collaborations, greater State Department oversight and use of UN tools.
BIPARTISAN COMMISSION ON BIODEFENSE WARNS OF BIOLOGICAL THREATS TO CRITICAL US INFRASTRUCTURE
On 6 October, Homeland Preparedness News reported that the Bipartisan Commission on Biodefense warned that the US needs to protect infrastructure, share and secure information, and maintain public works and services, or risk further devastation from biological threats like COVID-19.
KEEPING AN EYE ON FINANCIAL TRANSACTIONS IN ETHIOPIA
On 8 October, ENACT Africa said that to curb illicit financial flows, Ethiopia should complement its recent efforts with a more comprehensive investigation of suspicious financial transactions. Ethiopia loses billions of dollars a year through illicit financial flows (IFF).
TIME IS RUNNING OUT FOR ABIY’S “NEW BEGINNING” IN ETHIOPIA
A post from the Atlantic Council on 7 October said that Ethiopian Prime Minister Abiy Ahmed has promised a “new beginning” as he begins a new 5-year term. It says that is precisely what Ethiopia needs after his first 3 years in office. Inflation stands at a record-high 34%, the nation’s debt has reached a crippling $30 billion, and efforts to privatize some of the country’s corporate crown jewels, such as Ethio telecom, have floundered amid allegations of genocide and predictions of mass starvation as the conflict over the country’s Tigray region rages on. The US African Growth and Opportunity Act is likely to be suspended by the end of October, what was once one of the world’s fastest growing economies suddenly finds itself on life support.
On 7 October, the Center for International Maritime Studies looked at modern sea mines, saying that, in 2021 the threat is worldwide: some 30 countries manufacture mines for their navies, and about 20 of these will sell to anyone with cash in hand. In June 2021, for example, Houthi rebels warned about “some hundreds of sea mines” laid in Red Sea and Arabian Sea ports and waterways.
DUTCH PM UNDER POLICE PROTECTION AFTER THREATS FROM A DUTCH-MOROCCAN
On 7 October, Morocco World News claimed that the Dutch PM is no longer allowed to walk alone amid fears of a potential kidnapping attack by the Mocro Maffia. Security services have put Mark Rutte under “police protection” after threats from the Mocro Maffia, a Dutch-Moroccan criminal network active in drug trafficking and money laundering in Europe.
NEW ZEALAND: THIEF MUST SURRENDER GOLD BARS WORTH $73,000 AFTER POLICE WIN COURT OF APPEAL CASE
On 8 October, Stuff reported that a burglar caught with $73,000 worth of gold bars in his bag while breaking into an Auckland laundromat must now surrender them to the Crown – after a judge had initially said he could keep most of their cash value.
US: DoJ EFFORTS TO COMBAT CYBER BREACHES BY TARGETING GOVERNMENT CONTRACTORS
A post on the Crime & Corruption blog from law firm Cooley on 8 October was concerned with the Civil Cyber-Fraud Initiative, just announced by Deputy Attorney General Lisa Monaco. It says that the initiative – along with other recent steps taken by the federal government – should prompt companies to be acutely aware of any areas in which their cybersecurity measures may be deficient or out of keeping with representations made in their government contracts.
AUSTRIA’S CHANCELLOR KURZ STEPS DOWN AMID CORRUPTION PROBE
On 9 October, Politico reported that Austrian Chancellor Sebastian Kurz has resigned, bowing to growing pressure over a bombshell corruption probe that has rocked the country’s political establishment to its core. Authorities suspect Kurz of masterminding a conspiracy that involved embezzling finance ministry funds to pay for polls that served his political agenda, according to court filings.
On 6 October, a Commentary in War on the Rocks says that the Turkish government has increased the frequency of its drone strikes against the Kurdistan Workers’ Party (PKK) in Syria and Iraq since 2019. It says that in the coming years, these drone strikes are likely to remain a persistent feature of Turkey’s counter-terrorism campaign. It has no incentive to stop them, but at the same time, these strikes will not incapacitate the PKK or end its 4-decade-long fight. It is said that Turkey’s drone strikes will create more tension in the US-Turkish relationship and more tensions between the US and its counter-Islamic State partners in Syria. It is argued that the US has done, and will do little, and that it lacks any real leverage to do anyway. It is worth noting that Turkey is an enthusiastic and able user and developer of drones.
OECD – ENDING THE SHELL GAME: CRACKING DOWN ON THE PROFESSIONALS WHO ENABLE TAX AND WHITE-COLLAR CRIMES
In the light of the Pandora Papers (and it refers to the previous Panama Papers and Paradise papers), this OECD paper from February is a relevant read. It states that its purpose is to support policy makers and law enforcement authorities to address the actions of that small set of lawyers, tax advisors, notaries, financial institutions and other intermediaries that are “professional enablers,” intent on facilitating wrongdoing by their clients. It says that such professional enablers play an integral role in making it easier for taxpayers to defraud the government and evade their tax obligations, such as by offering non-transparent structures and schemes to conceal the true identity of the individuals behind the illegal activities undertaken. They also, obviously, can and do facilitate other criminals, terrorists, and those involved in environmental and human rights abuses. The report explores different governmental strategies to detect, deter and disrupt the activities of professional enablers, with –
1. Understanding of the role of professional enablers;
2. The methods for identifying professional enablers;
3. Legal and regulatory frameworks to disrupt professional enablers;
4. Strategies for deterring professional enablers; and
5. Domestic and international multilateral efforts to address professional enablers
On 9 October, The Times reported that HM Treasury is to overhaul the role of financial regulators to ensure they do more to boost the international competitiveness of the City after Brexit. It says that a minister had told the FCA that it needed to “smell the coffee” over their role in boosting the competitiveness of the financial services industry. One suggestion is that regulators would have to consider the impact of policy decisions on the UK’s position as a global financial centre, alongside their other objectives including maintaining the stability of firms, market integrity and consumer protection. It is said that FCA and PRA have opposed an expansion of their remits.
PANAMA: REACTION OF LOCAL BRANCH OF TRANSPARENCY INTERNATIONAL
On 9 October, Newsroom Panama reported the comments of the local chapter of Transparency International to the Pandora Papers. The group has published an indictment of government inaction and has called on Government and the private sector to make the changes required by the standards of transparency and international cooperation against money laundering and “not to sacrifice the rest of the country with the cost reputational, economic, legal and ethical caused by a non-viable management model ”. the group says that the regulatory changes introduced since 2016, when the Panama Papers cases related to Mossack Fonseca were published, “were not sufficient or timely”.
RUSSIAN BANKER GEORGY BEDZHAMOV SMUGGLED MONEY OUT USING CYPRUS
On 8 October, The Blitz carried an article claiming that Georgy Ivanovich Bedzhamov, a fugitive Russian banker, and his sister Larisa Markus, used companies and trusts set up by a prominent Cypriot law firm – Nicosia-based Demetrios A. Demetriades LLC and affiliated companies (collectively known as Dadlaw) – to move and hide assets while on the run.
“AUSTRALIA HAS BECOME A GO-TO DESTINATION FOR DIRTY MONEY”
On 9 October, an article in the Sydney Morning Herald was a reaction to the Pandora papers, and said that more than 400 Australians had been were found in the documents, ranging from financiers to property developers and the superrich. There were also examples of PEP and foreign citizens accused of corruption buying up assets in Australia or funnelling potentially ill-gotten gains through entities incorporated in Australia unchecked. The local branch of Transparency International is quoted as saying thatAustralia is one of the best places to launder dirty money and the reason for that is there is very little scrutiny, there’s very little verification and checking of information; and that the irony is that you need to show more proof of identity to collect a parcel from the post office, than you need to show to register a company in Australia.
HOW THE RELATIVES OF A RUSSIAN STATE COMPANY’S CEO GOT RICH
On 8 October, OCCRP carried a report claiming that relatives of prominent Russian businessman Sergei Chemezov have amassed at least $400 million worth of listed assets. These include an 85-meter yacht, formally owned by Chemezov’s 34-year-old stepdaughter through a BVI company, and relatives were also linked to a real estate business in Ireland and a hotel in Croatia previously affiliated with the founder of Penthouse Magazine.
BELGIAN GALLERY SOLD MILLIONS WORTH OF ART WITHOUT PAYING TAX
On 9 October, the Brussels Times reported that paintings listed in Belgian art gallery Vedovi’s 2017 catalogue were worth over €15 million, but they were registered in an offshore location in Hong Kong, as were the millions made from their sale, so they were thus totally tax-free. It is said that Belgian businessman Paolo Vedovi registered a Global Art Portfolio Limited in Hong Kong with the sole mission of buying and selling the modern and contemporary works. However, none were stocked in Hong Kong and Global Art has no activity, stores, and employees there. It told the Hong Kong income tax department that it had never done business there, and that all its operations, including the acquisition, maintenance, and sale of art, were done from Europe.
On 9 October, The Standard in Zimbabwe reported that Martin Rushwaya and a Colonel Grey Mashava (who is now retired from the army) opened a shell company in the Seychelles using a Russian law firm. The company’s business was said to be “trading in special stones”. It is said that the Seychelles TCSP involved submitted an SAR to the local FIU in 2021, due to the 2 persons involved being PEP. It is suggested that the company may have been involved in the trade in diamonds from Marange fields, which US Customs say involves the use of forced labour. An ally to President Mnangagwa, Rushwaya is said to have “vast” business interests across much of the country’s economy.